Greg Hinz On Politics

CTA pension adviser under SEC probe works for water district, too

A pension adviser under investigation by the U.S. Securities and Exchange Commission for allegedly failing to disclose a conflict of interest has not one but two big public-sector clients here.

In a joint report a week ago with the Better Government Association, I wrote about work done for the Chicago Transit Authority by Atlanta-based Gray & Co., the firm of investment adviser Larry Gray. Gray & Co. recently resigned from working for Atlanta amid the SEC probe and complaints that he'd also failed to disclose a tax lien against his home and a $1 million settlement in a lawsuit that accused him of fraud.

Now, the BGA reports, in addition to being a top adviser to the CTA's retirement funds, Gray & Co. earns $170,000 a year overseeing $1 billion in investments by the retirement fund of the Metropolitan Water Reclamation District of Greater Chicago.

The water district told the BGA that it has discussed the matter with its lawyers and will monitor the situation. But it noted that here, unlike in Atlanta, Gray & Co. only advised it on investments and did not put any of its money into financial vehicles directly operated by the firm.

Mr. Gray has not returned phone calls but, in letters to both the CTA and the water district, he has strongly disputed "attacks on my character" and defended his firm's work.

Officials at both agencies have said they are satisfied with the advice they've received from the company.